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NSE (Nifty): 14851

Technical Outlook

* The index started Tuesday’s session with a gap down opening. However, supportive efforts emerged from 38.2% retracement of past five sessions up move (14461-14966), at 14770 that helped the index to curb intraday losses. As a result, daily price action formed a high wave candle carrying lower high-low, highlighting breather after past four sessions 500 points rally

* Going ahead, we reiterate our positive stance on the market and expect the Nifty to gradually retest lifetime highs of 15430 in May 2021. However, we believe the move towards 15400 would not be in a linear manner as a round of intermediate pullbacks cannot be ruled out. Hence, traders can use bouts of volatility to their advantage to build long positions by accumulating quality large cap and midcap stocks. In the process, we expect broader markets to outperform amid progression of Q4FY21 earnings

* The Nifty midcap and small cap indices maintained their relative outperformance and scaled fresh 52-weeks high despite minor profit booking in the benchmark, highlighting inherent strength. Going ahead, we expect broader markets to see acceleration in relative outperformance wherein small cap index would witness catch up activity as the midcap index is at an all-time high whereas small cap index is still 7% away from lifetime highs

* Structurally, we do not expect the index to breach the key support threshold of 14200. Despite elevated volatility owing to concern over second Covid-19 wave, it has managed to hold the key support of 14200 and formed a higher base. Hence 14200 would continue to act as a key support as it is confluence of:

* a) 100 days EMA placed at 14290

* b) last month’s low placed at 14151

* In the coming session, volatility would remain high owing to weekly derivative expiry. We expect index to consolidate with a positive bias amid stock specific action. Hence use intraday dip towards 14800- 14825 to create long for target of 14914.

NSE Nifty Daily Candlestick Chart

Nifty Bank: 32872

Technical Outlook

* The daily price action formed a inverted hammer like candle with small real body signalling buying demand at lower levels after a gap down opening near the 61 . 8 % retracement of the last four sessions pullback (32068 -33297 )

* We expect the index to head towards our target of 34900 levels, in coming weeks as it is the 61 . 8 % retracement of the entire last two months decline (37708 -30405 ) . Any corrective decline towards 32000 -32400 would attract strong buying demand in the coming sessions

* Key point to highlight is that over the past nine sessions the index has retraced just 61 . 8 % of preceding seven sessions up move (30405 -34287 ) . The slower pace of retracement indicates a higher base formation

* • The slower pace of retracement after the recent up move of 3880 points, which is the larger in magnitude compared to late February rally of 2256 points highlights robust price structure and the current consolidation should be used as an incremental buying opportunity in quality banking stocks

* The index has immediate support at 32000 -31500 levels being the confluence of the last two weeks low and the 61 . 8 % retracement of the current up move (30405 -34287 ) . While the major support is placed in the range of 30500 -30000 levels

* • The index has maintained the rhythm of not correcting more than 20 % as witnessed since March 2020 . In the current scenario, it rebounded after correcting 19 % from the all -time high (37708 ) . Hence it provides favourable risk -reward setup for the next leg of up move

* In the coming session, the index is likely to open flat to negative note amid soft global cues . Volatility is likely to be high on account of the weekly expiry, however we expect the index to hold above last session low (32700 ) and trade with positive bias . Hence, use dips towards 32760 -32820 for creating long position for the target of 33040 , maintain a stoploss of 32660

Nifty Bank Index – Daily Candlestick Chart

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